Scam artists target those facing foreclosure

Homeowners facing foreclosure have one more thing to worry about: Getting "help" from scam artists.

Steve Tarter

Homeowners facing foreclosure have one more thing to worry about: Getting "help" from scam artists.

"This is a relatively new trend affecting homeowners struggling with their mortgages," said Jeff Telling, central Illinois regional manager for Chicago-based Family Credit Management.

"Many for-profit companies are contacting delinquent consumers. Our Rockford office even reported hearing from consumers who have had these companies knocking on the front door of consumers who were in pre-foreclosure," said Telling.

"We're hearing about scams all over the country, from California to Kansas to Florida. The sad thing is that people are paying money for assistance that, in most cases, is available at no cost to the consumer. Consumers need to know there is help available and they should never pay for this type of assistance," said Telling.

"Consumers need to resist offers of a rescue. These scam artists prey on desperate homeowners who are struggling to save their homes," she said.

One type of rescue fraud scheme involves scam artists who convince home owners to sign over the title of their home under the promise that the home will be signed back over to the original owner at a later date. "This is especially devastating to homeowners who often have their entire life savings wrapped up in their home's equity," said Madigan.

The predominant foreclosure "rescue" scams generally come in three varieties, according to the San Diego-based Housing Opportunities Collaborative:

Title Transfer: The most dangerous scheme is the "bailout" that never quite works. This scenario includes various schemes in which the homeowner surrenders title to the house in the belief that within the deal, they'll be able to remain in the home as a renter, and eventually buy it back. Another scam convinces the homeowner to transfer title to a "federal land grant" with the false promise that this prevents the lender from foreclosing.

Bait And Switch: In the bait-and-switch scheme, the homeowner fails to realize they are surrendering ownership of the house in exchange for a "rescue." Many homeowners later insist that they believed they were only signing documents for a new loan to make the mortgage current.

Phantom Help: The third scheme could be called "phantom help" since the "rescuer" charges outrageous fees, either for light-duty phone calls and paperwork the homeowner could have easily done, or on a promise of more robust representation that never happens.

Many scammers use "affinity marketing" - that is, using Spanish-speakers to market to Spanish-speaking consumers, senior citizens to senior citizens, and other matches, according to LOLO, a Berkeley, Calif. legal aid group.

LOLO offers the following tips for those who believe they may be losing their home:

- Stay in touch with your mortgage lender. Contrary to what a foreclosure scammer will tell you, you should contact your lender the minute you have trouble paying.

- Get full information about the foreclosure process. Your best offense in saving your home, and your best defense in preventing scams, is to learn about and understand the foreclosure process.

- Never make a verbal agreement. Always get everything in writing.

- Seek help from a legitimate foreclosure counseling agency. See HUD's Web site at www.nfcc.org for HUD-approved counseling agencies.